[The IPKat] [Guest post] A tale of David and Goliath in Gangnam style?

[Eleonora Rosati]

[Guest post] A tale of David and Goliath in Gangnam style?

 Eleonora Rosati Tuesday, March 03, 2026 - Guest post, LVMH customization, Nari Lee, repair, South Korea, trade marks, upcycling

Recently, the Supreme Court of Korea issued a decision on upcycling and trade mark law, as discussed in this guest contribution by Katfriend Nari Lee (Hanken School of Economics). Here’s what she writes.

A tale of David and Goliath in Gangnam style?

by Nari Lee

Nari's Kat Tenny while taking a break from all the legal reading

Korean consumers recently saw the former First Lady, Kim Keon-hee, punished by her love of free luxury goods. The consumers of luxury goods in Korea are often tiered – the upper class consumers, so called ’0.1. percenters’ go for the goods that are utterly new and utterly inaccessible, while the public crave the accessible luxury goods either through painstaking saving or through recycled second-hand goods. There are also thrifty Korean consumers who rely on the service of crafty artisans to repair, reform and restore luxury goods, once they buy them. The tale of Gangnam Sa plays out against this backdrop.

Gangnam Sa is a repair shop operating in Seoul, serving the luxury goods-loving and yet thrifty owners, who would like to extend the lifecycle of their much-loved items. The skilled craftspeople of the repair shops have become famous for their professional skills and have been featured in the media for the extreme measures they go through, to perfect the restoration of the goods. When requested by the owner, they also provide ‘reform’ (i.e alter, customize and so called ‘up-cycling’ refurbishment) services. This was noted by one of the giants, Louis Vuitton Malletier (LVM), whose famous monogrammed bags were requested to be repaired and altered. LVM claimed such service amount to, first, trade mark infringement under Article 2.1(11) of the Korean Trademark Act and, secondarily, violation of extended protection of famous marks under Article 2.1(c) Unfair Competition Prevention Act.

At first instance, the Seoul Central District Court (Decision of 12 October 2023, Case 2022 Ga Hap 513476) ruled in favour of LVM, finding trade mark infringement (main claim). The court ruled, among others, that the ‘reform’ was not a mere repair but rather manufacturing of new commercial goods, denying the identity of the original and repaired goods, thus rejecting the application of the doctrine of exhaustion. The court ruled that there was a trade mark use in the repaired and re-furbished bags and wallets, as the goods have independent value as commodities, with a likelihood of confusion by the general consumer. On appeal, the IP High Court of Korea (Decision of 28 October 2024, Case 2023 Na 11283) upheld the lower court’s decision, reiterating that the repair shop’s use was use of trade mark in the course of trade. The secondary claim for extended protection for marks with reputation under the Unfair Competition Prevention Act was left unaddressed as the Court accepted the main claim. The repair shop, Gangnam Sa, appealed.

The Supreme Court, in the decision of 26 February 2026 (Case 2024 Da 311181) finally reversed and remanded the decision. The Supreme Court ruled that (1) when a service provider, at the request of the owner, engages in the conduct of ‘reform’ (alteration, customization or upcycling) and returns the refurbished goods to the owner who uses the goods for private purposes, such conduct of the service provider is not trade mark infringement. This is because the display of trade marks on the refurbished goods by the service provider in goods for private use is not use of a mark as a trade mark and that the doctrine of exhaustion should apply to the reformed goods in principle. However, the Court noted that, even if formally, it appears to be a ‘reform’ service at the request of the owner, there could be special circumstances requiring an evaluation that the service provider controls and directs the process of refurbishment in practice. Consequently, they may offer refurbished goods as their own product in the course of trade, manufacturing and selling them. In such cases, the display of trade marks on the refurbished goods by the service provider is a use of a mark as a trade mark, and thus would constitute trade mark infringement.

To determine whether a service falls under exceptional circumstances, the Court stated that various factors should be considered holistically. These include the process and substance of the owner’s request, the ultimate decision-maker in determining the purpose, forms, and number of reformed goods, the nature of the remuneration received by the service provider, the source of the materials used in the reform, the proportion of materials used, and ownership interests in the reformed goods. The Court ruled that the burden of proving the special circumstances is on the trade mark holder who claims that the reform service is trade mark infringement. In addition to this, the Court emphasized the knowledge of the service providers. The reform service providers may still be jointly liable if they supply the service, even when they know or should have known the owner’s request could be trade mark infringement, such as the case when the owner of the goods displaying the registered trade marks requests the service not for the purpose of private use but to offer the goods in the commercial channel.

Applying this to the facts, the Court ruled that the defendant (appellant) had provided lawful services, as he returned the repaired and refurbished goods to the owners. The display of the registered trade mark on the refurbished goods did not amount to use of the mark as a trade mark and thus could not constitute trade mark infringement.

Since the first ruling in 2022, the case has garnered much attention, both in Korea and abroad, as it concerned the legality of so called upcycling services for luxury goods bearing famous marks. The general public was captivated by the narrative of the case – a small repair shop, run by a skilled craftsman with over 40 years of experience, challenged by a famous luxury trademark holder. Ordinary Korean consumers were incensed at the possibility that, after paying a hefty sum for the goods, they would be barred from improving or extending the lifecycle of their legitimately purchased goods. There was even an amicus brief authored by US law professors, which was circulated by a consumer and digital citizen rights advocacy group. The majority of scholars criticized the IP High Court decision as it seemed to disregard sustainability policy and constitutionally guaranteed ownership right. A consumer group even initiated a petition for appeal to Supreme Court. In the melee, it was reported that the famous trade mark holder had surreptitiously hired a third party to acquire the refurbished items to collect evidence. In response, on 26 December 2025, the Supreme Court even convened a public oral hearing, which it rarely has done, in non en-banc decision.

In the Korean media, the Supreme Court’s decision has been hailed as a win for the small repair shops and consumers against luxury giants. Doctrinally, by distinguishing an owner-requested repair and refurbishment service for private use from commercial upcycling as a trade, under the control and direction of the service provider, the Court clarified the doctrine of trade mark use in the circular economy. Conduct such as alteration, customization and upcycling may also be judged using the similar doctrine of trade mark use, focusing on who the recipient of the refurbished goods is – the owner or the third parties. The decision seems to imply that the pendulum is swinging slightly away from the one-track expansionist development in the protection of famous trade marks, to include all economic activities even incidentally displaying the trade marks. In its reference to the EUTMR Article 8(4), 9(2) ‘use in the course of trade’ as well as 15 USC §1114, §1127 ‘use in commerce,’ the Korean Supreme Court appeared to call for a common understanding of fair and honest commercial practices in the protection of trade marks. In Korea at least, there is a sense of relief that consumers would not be punished for their frugality in the consumption of luxury goods, unless for a downright graft. The repair shops in Korea now can lawfully resume their extremely arduous but greatly appreciated ‘hospital’ services, extending the lives of the sick bags, as long as the patients are in the end reunited with their families.

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